Bridgewater has negative free cash

Bridgewater is one of a handful communities in the state with a negative free cash balance as the town’s more than $400,000 in the red leaves yet another black mark on the town’s finances.

“The town of Bridgewater’s general fund free cash is in the hole by $429,353 as of July 1, 2009,” said Selectman Mike Demos.

“Free cash” refers to a town’s actual receipts as determined by the Department of Revenue in excess of revenue estimates and unspent amounts in departmental budget line items for the previous fiscal year plus unexpended free cash from the previous year.

The money doesn’t have to be raised or made up, but the town has no cash reserves and the $216,000 in stabilization and a $10,000 Advisory Board reserve fund is all that is available in case of emergency.

In a letter to the town last month, the Department of Revenue warned Bridgewater that because of its financial situation, the state must review and approve the town’s 2010 balance sheet before Bridgewater can set its 2011 tax rate.

A delay in setting the tax rate means a delay in mailing tax bills that generate the revenue used to run the town.

The DOR also expressed concerns with “management changes to be made by Bridgewater in the near future,” a likely reference to the April election of a new treasurer-collector, which is currently vacant and the town’s searches for a new municipal administrator-town manager and permanent full-time town accountant.

In a recent audit done for the town by Roselli, Clark & Associates, the firm compared Bridgewater’s finances to 12 other Massachusetts towns with a similar population and average annual income.

Of those comparable towns, Bridgewater is the only town with negative free cash and only one had less in stabilization.

In addition to being available in case of emergencies, free cash also shows credit rating agencies and other members of the financial community that the town is financially stable and credit worthy so it can borrow money at reasonable interest rates to pay its bills.

Bridgewater’s creditworthiness is bouncing at the bottom of the barrel, said Demos, noting the town tried to sell $5 million in revenue anticipation notes last week, but no banks were interested. The town was ultimately able to sell $3 million at 1.60 percent interest and will have to try to sell the other $2 million in February.

“This is further evidence as to why I remain deeply concerned about the financial condition of the town,” said Demos.